Cramer's Morning Take: Bristol Myers & Eli Lilly 11/25/24

Jim Cramer (0:02)

Hey, it's Cramer, and this is my Morning Take on the market from today's CNBC Investing Club Morning Meeting.

Jeff Marks (0:07)

Just talking about dividends, we added a pretty big yield stock to the portfolio today. Bristol Myers yields about 4%, but that's not exactly why we're buying it. There's many other reasons. The key being, yes, they have this patent cliff coming, talking about trough earnings in 2028, as they lose key drugs, the patent protection, but they have this schizophrenia drug, first approved by the FDA in over 30 years.

Jim Cramer (0:36)

Let's go over that, because it's really important. This was a very seminal breakthrough by Bristol Myers. They bought a company, Carunatherapeutics. And there is nothing for people with schizophrenia. Now, schizophrenia is one of the diseases. People say, who are those unfortunate people who are homeless or they've not been able to keep a job? Well, it tends to be a preponderance of them have some degree of schizophrenia. And it also may work for bipolar. The tragedy of this, by the way, is that the drugs, they all created a huge weight gain. So then people got very sensitive to it, got off the drugs. People are always getting off the drug. This one has no side effects that we've seen. So therefore, I think, and I know I'm putting out a bold target there, this could be a $20 billion drug.

Jeff Marks (1:22)

OK, so JP Morgan, they think $5 billion by 2030, but they think it could go in the $10 billion rage if it gets approved for additional indication.

Jim Cramer (1:30)

We just saw how hard it is. Abbey just tried to do it. Abbey's a great company.

Jeff Marks (1:34)

They couldn't do it. And that sent the stock there.

Jim Cramer (1:36)

Right, and then I want to wait. I do want to wait until it goes lower because of the patent cliff, which is reflected here. But I think Chris Burner is doing a remarkable job running the company, and I think people don't understand that this is an inexpensive stock.

Jeff Marks (1:50)

8 times earnings, yeah, not expensive at all. We also added to Eli Lilly, finally not restricted. Remember last Monday we wanted to buy 5 shares at 7.18. That was off the 10 that we sold at 9.60. Stock was hit hard after a confusing quarter. You also had when RFK Jr. was picked to lead the HHS. He's a critic of the BC Drugs, but it's no longer as expensive as it used to be. You were talking 33 times 25 earnings, 25 times 2026 earnings.

Jim Cramer (2:21)

I don't think people realize how inexpensive it is. I also think people don't realize how hard it is to develop the plants. This reminds me of Intel. When people just said, well, everyone's going to, they're just going to knock off Intel. But it turned out it was the foundry that was the key thing. The foundry that makes, we'll use that analogy, that makes the Lilly drugs, which are always very hard to make the foundry, so to speak.

Jeff Marks (2:42)

And they'll have supply coming more online in Q4 and in 2025, which should, you know, try and keep these drugs off the shortage list. So the compounders can, you know, in a croach on their territory, that's key there.

Jim Cramer (2:59)

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SPEAKER_3 (3:12)

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